China's Cofco supercharged its growth as a world force in grains
by buying control of Dutch-based Nidera, extending a spree of deals aimed at exploiting
growing world crop flows, and food security concerns.
State-owned Cofco, China's biggest grains trader, said that
it had strengthened its position "as a key player in the global agricultural industry"
by agreeing on Friday to buy 51% of Nidera, which sells some 33m tonnes of
crops a year, and reaps annual revenues of more than $17bn.
"Investing in Nidera is in line with Cofco's strategy to
become a global player in the agricultural industry with a fully integrated,"
the group's chairman, Frank Ning, said.
The deal will also marry a group based in China, the world's
biggest importer of commodities including cotton, rubber and soybeans, with, in
Nidera, a trading house with long-standing relationships in some of the world's
top crop exporting countries.
Nidera, which was founded in the Dutch port of Rotterdam in
1920, has been trading in Brazil, a major exporter of the likes of corn, coffee,
cotton, soybeans and sugar, since the 1950s, and in Argentina since the 1970s.
Patrick Yu, the Cofco president, said: "Nidera has a strong
origination platform in Brazil, Argentina and Central Europe as well as a
global trading network, which can further extend Cofco's global presence and
create new opportunities."
For Nidera, chief executive Ton Van Der Laan said that the
deal "will generate great growth opportunities.
"The Chinese and Asian markets are of great importance to
Nidera," which has offices in Shanghai and Singapore, besides in Mumbai in
While the groups declined to reveal the value of the deal,
it has been reported to value Nidera at $4bn.
The companies said that they would now work together on obtaining
regulatory approvals for the deal, which will be required from a number of
Ironically, it is Chinese authorities which have appeared a handicap
to many recent grain trading, taking nearly a year to approve in April 2013 the
takeover of US-based Gavilon by Japan's Marubeni, and only then when
These included an undertaking that Marubeni and Gavilon continue
selling soybeans to China as separate companies, with two different teams, to
prevent the combined group gaining undue hold over the country's important
imports of the oilseed.
Swiss-based Glencore blamed Chinese authorities for delays
to its 2012 takeover of Canadian grain hander Viterra.
And Australia's GrainCorp, in agreeing an ill-fated takeover
by US-based Archer Daniels Midland last year, secured a mechanism to compensate
its shareholders for regulatory delays, noting that "Chinese merger approvals
"tend to drag on longer than we would normally expect in the marketplace".
However, Australian officials in November blocked the deal,
on competition grounds.
Cofco's deal also follows in grain handling deals including
the purchase earlier this month by Japanese trading giant Sumitomo Corp of full
ownership of Australian grain merchant Emerald Grain.
US farm co-operative CHS last year purchased a 50% stake in
Many deals have been aimed in particular at exploiting the growing trade flows of crops to Asia from exporting regions such as South America and the former Soviet Union.
World trade in wheat and coarse grains in 2013-14 is estimated by the International Grains Council at 286m tonnes, up 7.9% year on year, with a further 108m tonnes, up 11.3%, in trade in soybeans before factoring in other crops such as cotton, rice, rapeseed and sugar.
Cofco, which employs some 120,000 staff, has made only small
deals abroad up to now, such as the Aus$136m purchase of Australian sugar
producer Tully Sugar in 2011.
Domestically, it is the biggest shareholder in China
Mengniu, China's top dairy group, and also includes drinks group China Foods
oilseeds processor China Agri-Industries Holdings in its portfolio.
Nidera – which took its name from its original major
business areas, the Netherlands, the (East) Indies, Deutschland (Germany),
England, Russia and Argentina - employs some 3,800 people in 20 countries.